Decentralized finance pioneer Sky, formerly Maker, is forging ahead with a plan to offload wrapped Bitcoin collateral from the platform.
Following a governance vote that ran for three days and closed on Sept. 19, the DeFi lending and borrowing platform has ratified to remove its exposure to wrapped Bitcoin (WBTC).
The vote garnered overwhelming support from the Sky community with the proposal passing with 88.17% in approval pledging 95,826 MKR.
Additionally, 11.83% abstained from voting and there were no votes against it, however, only 13 MKR whales participated in the vote.
Sky governance poll results. Source: MakerDAO
Sky will now proceed with offloading WBTC in multiple phases, with the first commencing on Oct. 3 and the final phase on Nov. 28.
Sky’s decentralized non-custodial liquidity protocol, SparkLend, currently has $61.38 million in WBTC-backed collateralized debts.
BA Labs, an advisor to the DeFi protocol, raised concerns over WBTC in August. On Sept. 12, the team initiated a proposal stating that it was planning to offboard WBTC variants from SparkLend and Legacy Vaults.
At the time, the team cited concerns over “recent changes in WBTC ownership and control, likely involving Justin Sun or affiliates,” adding that this poses “significant counterparty risks based on past track records with other Sun-affiliated products.”
The custodian holding the Bitcoin backing WBTC, BitGo, partnered with Tron founder Justin Sun-affiliated BitGlobal in August, sparking the concerns.
While lambasting Coinbase’s recently launched cbBTC wrapped Bitcoin variant, Justin Sun defended WBTC stating “WBTC, USDT, and Tron have nothing to do with any Chinese regulations,” on Sept. 13.
Meanwhile, Sky is considering alternative forms of wrapped Bitcoin for collateral including Coinbase’s cbBTC and Threshold’s tBTC, according to a proposal earlier in September.
Related: Sky proposes dropping Wrapped Bitcoin over claimed Justin Sun ties
Sky is not the only DeFi platform looking to distance itself from WBTC. On Sept. 18, a request for comment was posted on the Aave governance forum to reduce wrapped Bitcoin exposure.
The same concerns over BitGo were given:
“Although we continue to be in communication with BitGo to establish clarity about BIT Global’s compliant status, we remain unconvinced about the outlook for this partnership and its implications for WBTC transparency standards and user assurances going forward.”
In a post on X on Sept. 19, Aave founder Stani Kulechov clarified that “Aave is not offboarding wBTC, this is a proposal from one of the risk providers to cap wBTC.”
Source: Stani Kulechov
Aave has around $990 million in debt exposure to WBTC, according to ChaosLabs, which raised concerns in August.
There are currently around 152,942 wrapped Bitcoin on Ethereum with a market cap of around $9.6 billion, according to the order book, down almost 40% from its peak of $15.8 billion in November 2021.
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